Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check

(Check one):

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: As of November 9, 2016,May 15, 2017, there were 5,317,758 shares of the registrant’s common stock, $.10 par value per share, outstanding.

Item 1. Financial Statements

 

The Company’s remaining land inventory consists of 6 single family lots, an approximate 7 acre parcel and some other minor parcels of real estate consisting of easements in Citrus County Florida, which are owned through its wholly-owned subsidiary, Sugarmill Woods, Inc. (“Sugarmill Woods”). In addition, Punta Gorda Isles Sales, Inc. (“PGIS”), a wholly-owned subsidiary of the Company, owns 12 parcels of real estate in Charlotte County, Florida, which total approximates 60 acres, but these parcels have limited value because of associated developmental constraints such as wetlands, easements, and/or other obstacles to development and sale.

On June 17, 2016 two contracts were executed for the sale of two undeveloped parcels of real property consisting of 369 acres located in Hernando County, Florida (the “Property”) between Sugarmill Woods and the State of Florida Department of Transportation (the “Florida DOT”). The Property was encumbered by secured creditor claims, and the sale of the Property closed on June 21, 2016 for $9,000,000. The Florida DOT desired to acquire the Property in connection with the northward extension of the Suncoast Parkway as part of the Suncoast Parkway, Project 2.

The Trustee of the 6.5% subordinated debentures, which matured in June, 1991, with an original face amount of $1,034,000, provided notice of final distribution to holders of such debentures on September 2, 2014. In connection with such final distribution, the Trustee maintained a debenture reserve fund with a balance of $41,000 as of September 30, 2016March 31, 2017 and December 31, 2015,2016, respectively, which is available for final distribution to holders of such debentures who surrender their respective debenture certificates.

As of September 30, 2016March 31, 2017 and December 31, 20152016 the remaining outstanding principal balance on such 6.5% subordinated convertible debentures that werehave not been surrendered by the respective holders equals $447,000 plus accrued and unpaid interest of $809,000$824,000 and $788,000,$817,000, respectively. If and when such remaining debentures are surrendered to the Trustee, the applicable portion of such principal and accrued interest will similarly be recorded as debt and interest forgiveness. As the Company has consistently stated in prior filings, the Company believes that any potential claims by the respective debenture holders on such 6.5% subordinated convertible debentures would be barred under the applicable statutes of limitations.

As of September 30, 2016,March 31, 2017, the Company remained in default under its subordinated convertible debentures and notes payable, as well as the accrued interest with respect to its collateralized convertible debentures.

Revenues for each of the three monthsmonth period ended September 30,March 31, 2017 and 2016 decreased by $1,000 to $1,000 from $2,000 for the comparable 2015 period as a result of decreased interest income.was $1,000. Interest income for the three monthsmonth period ended September 30, 2016March 31, 2017 represents interest earned on the Company’s money market account. Interest income for the three monthsmonth period ended September 30, 2015March 31, 2016 represents related party interest on the short-term note receivable with LIC, an affiliate of L-PGI, the Company’s primary preferred stock shareholder.LIC. The Company received payment of the note receivable balance from LIC on June 23, 2016.

Expenses for the three months ended September 30, 2016March 31, 2017 decreased by $1,832,000$1,944,000 when compared to the same period in 20152016 primarily as a result of a decrease in interest expense during the three months ended September 30, 2016.March 31, 2017. Interest expense for the three month period ended September 30, 2016March 31, 2017 decreased by $1,834,000$1,965,000 compared to the same period in 2015, primarily due2016. There was no interest expense-related party during the three month period ended March 31, 2017 compared to interest expense-related party of $1,973,000 during the repayment of the outstanding principal of the Company’s collateralized debt with a portion of thesame period in 2016. During June 2016, proceeds from the Property sale received on June 23, 2016, includingwere used by the Company to repay the entire principal of the primary lender debt of $500,000, withwhich was held by PGIP, and the entire principal of the collateralized convertible debenture principal in the amount of $1,500,000, paid towhich was held by LIC and Love-1989. As a result there wasWith the full repayment of such principal, no additional interest expense during the three months ended September 30, 2016was accrued with respect to such collateralized debt.debentures subsequent to June 23, 2016.

Taxes and assessments expense decreased by $1,000 during the three month period ended September 30, 2016March 31, 2017 when compared to the same period in 20152016 as a result of lower real estate tax expense during the three month period ended March 31, 2017 due to the sale of Property sold to the Florida DOT on June 21, 2016. Consulting and accountingaccounting-related party expenses increased by $1,000 during the three monthsmonth period ended September 30, 2016March 31, 2017 when compared to the same period in 2015.2016. A quarterly consulting fee is paid to Love Real Estate Company (“LREC”), an affiliate of L-PGI, of one-tenth of one percent of the carrying value of the Company’s assets which increased effective June 21, 2016 with the sale of Property to the Florida DOT.

Legal and professional expenses during the three monthsmonth period ended September 30, 2016March 31, 2017 increased by approximately $2,000$16,000 when compared to the same period in 2015,2016, primarily as a result of additional legal expenses incurred on a parcel in connection with the filing of the Company’s periodic reportsCitrus County requiring additional environmental remediation during the three month period ended September 30, 2016.March 31, 2017. General and administrative expenses during the three month period ended March 31, 2017 increased by $5,000 when compared to the same period in 2016 primarily as a result of increased audit and tax service fees during the three month period ended March 31, 2017. The Company accrued an income tax expense of $57,000 during the three month period ended March 31, 2017. As a result, a net loss of $364,000$449,000 was incurred for the three monthsmonth period ended September 30, 2016March 31, 2017 compared to a net loss of $2,195,000$2,336,000 for the comparable period in 2015.2016. After deducting preferred dividends, totaling $160,000 for each of the three monthsmonth periods ended September 30,March 31, 2017 and 2016 and 2015 , with respect to the Class A Preferred Stock, a net loss per share of $(.10)$(.11) and $(.44)$(.47) was incurred for the three month periods ended September 30, 2016March 31, 2017 and 2015.2016. The total cumulative preferred dividends in arrears with respect to the Class A Preferred Stock through September 30, 2016March 31, 2017 is $13,715,000.

Cash provided by operating activities forDuring the nine monthsthree month period ended September 30, 2016 was $2,846,000, primarily reflectingMarch 31, 2017, the Company’s net effect of the $9,000,000 received in the sale of the Property to the Florida DOT and $5,925,000 of accrued interest paid on collateralized debt. This compared to cash used in operating activities of $130,000was $64,000 compared to $29,000 for the comparable 2015 period. In addition,period in 2016. There was no cash provided from investing activities during the first nine monthsthree month period ended March 31, 2017 compared to $29,000 of net cash provided from investing activities in the comparable period in 2016 the Company received $178,000 in paymentwhich consisted of the note receivable principalproceeds received from LIC, an affiliate of the Company and the restricted cash of $5,000 from PGIP, the first mortgage lender, which was released upon the sale of the Property and satisfaction of the primary lender debt obligation owed to PGIP. Net cash used in financing activities was for the principal repayment of $2,000,000 of primary lender debt to PGIP and collateralized convertible debentures to LIC and Love-1989.LIC.

Total assets increaseddecreased by $220,000$64,000 at September 30, 2016March 31, 2017 compared to total assets at December 31, 2015,2016, reflecting the following changes:

 

 

During the nine monthsthree month period ended September 30, 2016,March 31, 2017, cash increaseddecreased by $1,029,000$64,000 compared to December 31, 2015, which is primarily attributed to the remaining proceeds2016 as a result of the Property sale to the Florida DOT in the second quarter of 2016. The Company anticipates that the cash will be utilized by the Company to fundfunding its future operating activities.

During the ninethree month period ended September 30, 2016,March 31, 2017, the amount of accounts payable and accrued expenses decreased by $3,000$5,000 primarily as a result of timing differences. Accrued real estate taxes decreased by $4,000$3,000 during the ninethree month period ended September 30, 2016March 31, 2017 due to the payment of previously accrued taxes. There was a net decrease of accrued interest in the amount of $1,103,000Accrued income taxes during the ninethree month period ended September 30, 2016 withMarch 31, 2017 increased by $57,000. Income tax of $57,000 was accrued at March 31, 2017 for the aggregate payment of $5,925,000 in accrued interest to PGIP, asestimated Alternative Minimum Tax on the holdergain on sale of the Company’s first mortgage note, andProperty during 2016. Accrued interest during the holders ofthree month period ended March 31, 2017 increased by $336,000 due to the collateralized convertible debentures being offset by an increase of accrued interest in the amount of $4,822,000 of interest expense for such period. During the ninethree month period ended September 30, 2016,March 31, 2017, the entireCompany made no interest or principal payments on its outstanding principal of the primary lender debt in the amount of $500,000 was repaid to PGIP,notes payable and the entire outstanding principal of thesubordinated convertible debentures in the aggregate amount of $1,500,000 was repaid to LIC and Love-1989.debentures.

The Company remains in default on the entire principal amount plus interest (including certain sinking fund and interest payments with respect to the subordinated convertible debentures) of its subordinated convertible debentures and notes payable as well as the remaining accrued interest owed with respect to the collateralized convertible debentures.

The principal and accrued interest amounts due as of September 30, 2016March 31, 2017 are as indicated in the following table:

The Company does not have sufficient funds available (after payment of, or the reserving for the payment of, anticipated future operating expenses) to satisfy the principal or interest obligations on the above debentures and notes payable or any arrearage in preferred dividends.

The Company remains totally dependent upon the sale of parcels of its various remaining properties with respect to its ability to make any future debt service payments.

The Company’s independent registered public accounting firm included an explanatory paragraph regarding the Company’s ability to continue as a going concern in their opinion on the Company’s consolidated financial statements for the year ended December 31, 2015.2016.

The discussion set forth in this Item 2, as well as other portions of this Form 10-Q, may contain forward-looking statements. Such statements are based upon the information currently available to management of the Company and management’s perception thereof as of the date of the Form 10-Q. When used in this Form 10-Q, words such as “anticipates,” “estimates,” “believes,” “expects,” and similar expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties. Actual results of the Company’s operations could materially differ from those forward-looking statements. The differences could be caused by a number of factors or combination of factors including, but not limited to: changes in the real estate market in Florida and the counties in which the Company owns any property; institution of legal action by the bondholders for collection of any amounts due under the subordinated convertible debentures (notwithstanding the Company’s belief that at least a portion of such actions might be barred under applicable statute of limitations); changes in management strategy; and other factors set forth in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time.

Not applicable.

The Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures under the supervision and with the participation of its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based on this evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2016.March 31, 2017. There have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2016March 31, 2017 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company, to its knowledge, currently is not a party to any material legal proceedings.

Not applicable.

Not applicable.

See discussion in Item 2 of Part I with respect to defaults under the Company's subordinated convertible debentures, collateralized convertible debentures and other indebtedness and with respect to cumulative preferred dividends in arrears, which discussions are incorporated herein by this reference.

Not applicable.

Not applicable.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.